Fastow Plea Deal Hits Snag In Wife's Case

The Judge In Lea Fastow's Case Gave Her Until Noon Today To Plead Guilty Or Face Trial.

HOUSTON -- Federal prosecutors Thursday were scrambling to rescue a plea bargain with former Enron Corp. chief financial officer Andrew Fastow after a judge rejected the terms of a companion deal with Fastow's wife.

Andrew Fastow, under his proposed agreement, would plead guilty and accept a prison term of no more than 10 years in exchange for his cooperation. Such a deal could provide investigators with the biggest break in their two-year probe of Enron's collapse.

Fastow, 42, is the highest-ranking official yet charged in the case, and his assistance is considered the government's best chance of unraveling the workings of the scandal and perhaps making criminal cases against former Enron chairman Kenneth Lay and former chief executive Jeffrey Skilling.

The deal was in jeopardy late Thursday, however, as it appeared contingent on Fastow's wife, Lea, a former Enron assistant treasurer, receiving a five-month jail sentence -- an arrangement that the judge in her case declined to approve.

U.S. District Judge David Hittner gave Lea Fastow, also 42, a deadline of noon today to change her plea to guilty to a single count of tax fraud or proceed to trial on six felony counts. Her trial is set to begin Feb. 10.

Hittner said he would agree to the plea change only if he reserved the right to impose a stiffer sentence later, after a pre-sentencing investigative report on Lea Fastow is completed.

Leslie Caldwell, director of the Justice Department's Enron task force, told Hittner that the deal could lead to "a global resolution" of two cases "of significant magnitude to the government."

Mike DeGeurin, Lea Fastow's lawyer, later told reporters that the judge's condition could be a deal-breaker.

"You'd have to be a mother to understand this," said DeGeurin, standing outside the courthouse on a rainy and foggy afternoon. "She has two children at home, 5 and 8. If Andy, her husband, has to go to jail sometime, we don't want the children to be without parents."

Earlier, prosecutors and lawyers for Andrew Fastow conferred in the chambers of U.S. District Judge Kenneth Hoyt, who is presiding over the former CFO's case.

Fastow played a leading role in Enron's collapse, according to an October 2002 indictment -- revised last May -- accusing him of 98 counts of conspiracy, fraud, insider trading, money laundering and obstruction of justice, among other felonies.

Fastow engineered the creation of dozens of off-the-books partnerships that enabled the big energy-trading company to falsely inflate its earnings and hide billions of dollars in debt, prosecutors say. He allegedly enriched himself by at least $30 million through personal dealings with the partnerships.

Two of Andrew Fastow's top lieutenants at Enron, Michael Kopper and Ben F. Glisan Jr., have pleaded guilty to fraud.

Fastow is thought to be cooperating in the probe of a third officer, former chief accounting officer Richard Causey.

Still, neither Lay nor Skilling has been criminally accused, and both maintain their innocence.

"As long as everybody tells the truth in there it doesn't impact Ken Lay at all," Lay's lawyer, Mike Ramsey, said Thursday outside the courthouse.